TAMPA — With most economic indicators pointing up, Hillsborough County government is approaching fiscal year 2015 in its strongest financial position in seven years.

County Administrator Mike Merrill painted a rosy scenario in his annual budget letter Monday to county commissioners and Hillsborough residents. Merrill said he is “cautiously optimistic” the local economy will continue to gain momentum and is proposing raises for county employees.

After six years of decline, sales tax revenue growth is back to 20-year historical averages, Merrill said, and taxable property values are up for the second year in a row. At the same time, a leaner county workforce has reduced the per capita cost of government by 19 percent since 2007.

Add to those factors lower borrowing rates, and you have a county government poised to tackle big-picture problems in the coming year such as homelessness, transportation and redevelopment of underserved neighborhoods.

“We are fiscally sound,” Merrill said in the budget letter, citing the county’s AAA bond rating.

It wasn’t so long ago the county was dealing with just the reverse. Appointed to the job in late 2010, Merrill faced plummeting revenues and multi-million-dollar budget shortfalls.

Forced to lay off hundreds of employees, Merrill challenged the remaining workforce to do more with less, stressing innovation and customer service. The county was able to maintain most government services without raising taxes.

“It really is pretty amazing that we came out of the recession so strong and were able to not reduce any services but to reduce the cost of government,” Merrill said in an interview Monday. “And now we’re in a position to invest in redevelopment and economic development. It is something we’re very proud of and citizens should be, too.”

Now, with fiscal constraints loosening their grip, Merrill is calling for a 4 percent pay increase for most county employees. If approved by the county commission, the wage hike will be the second in a row. Merrill said the raises are necessary if the county wants to attract and retain a talented and efficient workforce. “As an organization, we remain committed to identifying, training and mentoring our leaders of tomorrow,” Merrill said in the letter.

In preparing the 2015 budget, Merrill asked all county departments to identify ways they could operate with less money. The result, he said, was $1.4 million freed up to establish a redevelopment program. That money will be used to make the first several payments on a $20 million bond issue. Much of the money will be spent on infrastructure that county leaders hope will spur private investment and job creation in downtrodden areas of the county.

The areas where the money will be spent are yet to be decided, Merrill said, but the decisions will be based on principles such as enhancing the quality of life and sustainability of neighborhoods.

The county will also continue its economic development efforts on other fronts such as financial support of the film commission, sports commission, Visit Tampa Bay, the tourism agency, as well as with improved services for small businesses, including high-tech start-ups.

Merrill will make a brief budget presentation to commissioners Wednesday morning.